CPA Practice Exam - Financial Accounting and Reporting
Part 3
1. A deferred tax liability arises when revenue is recognized for tax purposes
it is recognized for financial reporting. Before
After: Before
2. Whic
of the following is true about deferred tax assets? They .
Represent future tax benefits Decrease
future taxable income
Both Represent future tax benefits and Decrease future taxable income: Both Represent future tax benefits and
Decrease future taxable income
3. As asset is
considered impaired when its carrying amount .
Exceeds its fair value
Is less than the fair value: Exceeds its fair value
4. When as asset is
impaired, the loss is recognized in .
Shareholders' Equity
Net Income: Net Income
5. Retained Earnings Represent .
The amount invested by shareholders
Cumulative earnings not distributed as dividends.: Cumulative earnings not distributed as dividends.
6. The issuance of
common stock for cash increases is .
Total Assets and Shareholders' Equity
, CPA Practice Exam - Financial Accounting and Reporting
Part 3
Assets, Liabilities and Shareholders' Equity: Total Assets and Shareholders' Equity
7. Comprehensive Income includes .
Net Income Only
Both Net Income and Other Comprehensive Income: Both Net Income and Other Compre- hensive Income
8. Other Comprehensive Income may includes 1) pension liability adjustments
2) Unrealized gain/loss from investments and 3) Gain/Loss from foreign trans- actions, true or False
True
9. The fair value optio
allows companies to measure at fair value.
Either Financial Assets or liabilities
Both Financial Assets and liabilities: Both Financial Assets and liabilities
10. When must a company make an irrevocable decision to elect the fair value option?
At the time of initial recognition
At the end of the fiscal year: At the time of initial recognition
11. Noncurrent assets include:
Accounts Receivable
Land and Buildings: Land and Buildings
12. Goodwil
l is recognized when a company is purchased for the fair
value of its net identifiable assets.
Less Than
More Than: More Than
Part 3
1. A deferred tax liability arises when revenue is recognized for tax purposes
it is recognized for financial reporting. Before
After: Before
2. Whic
of the following is true about deferred tax assets? They .
Represent future tax benefits Decrease
future taxable income
Both Represent future tax benefits and Decrease future taxable income: Both Represent future tax benefits and
Decrease future taxable income
3. As asset is
considered impaired when its carrying amount .
Exceeds its fair value
Is less than the fair value: Exceeds its fair value
4. When as asset is
impaired, the loss is recognized in .
Shareholders' Equity
Net Income: Net Income
5. Retained Earnings Represent .
The amount invested by shareholders
Cumulative earnings not distributed as dividends.: Cumulative earnings not distributed as dividends.
6. The issuance of
common stock for cash increases is .
Total Assets and Shareholders' Equity
, CPA Practice Exam - Financial Accounting and Reporting
Part 3
Assets, Liabilities and Shareholders' Equity: Total Assets and Shareholders' Equity
7. Comprehensive Income includes .
Net Income Only
Both Net Income and Other Comprehensive Income: Both Net Income and Other Compre- hensive Income
8. Other Comprehensive Income may includes 1) pension liability adjustments
2) Unrealized gain/loss from investments and 3) Gain/Loss from foreign trans- actions, true or False
True
9. The fair value optio
allows companies to measure at fair value.
Either Financial Assets or liabilities
Both Financial Assets and liabilities: Both Financial Assets and liabilities
10. When must a company make an irrevocable decision to elect the fair value option?
At the time of initial recognition
At the end of the fiscal year: At the time of initial recognition
11. Noncurrent assets include:
Accounts Receivable
Land and Buildings: Land and Buildings
12. Goodwil
l is recognized when a company is purchased for the fair
value of its net identifiable assets.
Less Than
More Than: More Than
